The NZD found some much needed support against the Pound overnight, having slipped to 1.9655 at the low before its recovery.
In the table below shows GBP/NZD exchange rate movement over the last month and the difference when exchanging £200,000 to NZD:
|Currency Pair||% Change||Difference on £200,000|
The dip in Sterling’s value is likely linked to the Brexit reports, with the latest update indicating a deal had not yet been reached.
Despite the overall tone of these reports being fairly positive, in terms of both hoping to reach a deal within the next week, the current stance by the DUP party is not helping to move proceedings along.
With both the UK government and the EU wanting to move onto phase two of the negotiations, it is likely a compromise will be reached before long. Therefore those clients holding the NZD may have a window of opportunity to sell their currency positions, at a better rate than they may have foreseen based on the recent downturn.
The New Zealand economy remains under severe pressure, with new Labour Prime Minster Jacinda Ardern and her policies being viewed by many as a potential threat to New Zealand’s longer-term economic wellbeing.
New Zealand’s economic prosperity over recent years has been driven by immigration, tourism and construction. These were believed to have peaked even before the change in government and with Ardern already banning foreign ownership of residential estates, there is a real concern this could cause a real state crash. She also opposes high levels of immigration and these are just two of the reasons investors have shied away from the NZD of late.
There was also a report released overnight, which confirmed the digital currency Bitcoin is now more valuable than the New Zealand economy. There is over 190 billion of the cryptocurrency in circulation, 5 billion more than New Zealand’s entire Gross Domestic Product (GDP) value.
Those clients holding Sterling should however, remind themselves UK economy is also under pressure. Despite a potential breakthrough in Brexit talks, I still feel there will be many other speedbumps to navigate over the coming months, which could also have a negative impact on Sterling’s value.
Having said this the Pound has gained over 10 cents against its NZD counterpart over the past 5 weeks, which in monetary terms is an additional 10,000 NZD on a £100,000 currency exchange.
My opinion remains that the recent upturn for the Pound is somewhat fabricated due to this lack of confidence in the NZD and as such, the Pound remains fragile in the eyes of investors. For this reason I would be very tempted to take advantage of the current highs, which would not be available had the political & economic situation in New Zealand been more stable.
For more information on how future data releases could affect your New Zealand Dollar transfer, call our trading floor on 01494 725 353 or email me here.